Characteristics And Types Of Market Structures

According to Prof.
R. Chapman, “The term market refers not only necessarily to a place but always
to a commodity and the buyers and sellers who are in direct competition with one
another.”

A.A.Cournot has defined
as “Economists understand by the term ‘market’ not any particular
place in which things are bought and sold but the whole of any region in which buyers
and sellers are in such free intercourse with one another that the price of the same
goods tends to equality, easily and quickly.”

Characteristic of Market

An Area – In economics a market does not mean a meticulous place but the
entire area where sellers and buyers of a product are spread. Modern modes
of communication and transport have made the market area for a product very
wide.

One Product – In economics, a market is not associated to a place but to
a specific commodity. Hence there are separate markets for diverse products.
For instance, there are separate markets for clothes, grains, jewellery etc.

Buyers and Sellers – The presence of buyers and sellers is essential for
the sale and purchase of a product in the market. In the topical times, the
presence of buyers and sellers is not essential in the market for the reason
that they can do trading of commodities merely by communication over phone
or emails.

Free Competition – There must be free rivalry among buyers and sellers
in the market. This competition is in relation to the price determination of
a product among buyers and sellers.

One Price – The price of a product is the same in the market for the reasons
that free rivalry amidst traders.

On the basis of above elements of a market its general definition may be as follows.
The market for a product denotes to the whole area where traders of that product
are spread and there is such free rivalry that one price for the product prevails
in the entire region.

Market Structure

Market structure
denotes the nature and scale of rivalry in the market for commodities and services.
The structures of market both for commodities and factor market are ascertained by
the nature of rivalry existing in a specific market.

Determinants

There are a number of determinants of market structure for a specific commodity.
They are:

The number and nature of Sellers

The market structures are influenced by the number
and nature of sellers in the market. They range from large number of sellers
in perfect rivalry to a single seller in untainted monopoly to two sellers
in duopoly, to a few sellers in oligopoly and to many sellers of discriminated
merchandise.

The number and nature of buyers

The market structures are also subjective by the
number and nature in the market. If there is a single buyer in the market,
this is buyer’s monopoly and is called monopsony market. Such markets
exist for the local labour employed by one large employer. There may be two
buyers who act mutually in the market. This is called duopsony market. They
may also be a few structured buyers of a produce. This is called oligopsony.
Duopsony and oligopsony markets are typically found for cash crops like rice,
sugarcane etc. where local factories purchase the entire crops for processing.

The nature of product

It is the nature of merchandise that decides on
the market structure. If there is product demarcation, commodities are close
surrogates and the market is characterised by monopolistic rivalry. On the
other hand, in case of no product demarcation the market is characterised by
perfect competition. And if a product is entirely diverse from other commodities,
it has no close surrogates and there is untainted monopoly in the market.

The conditions of entry into and exit from the market

The stipulations for entry and exit of firms in
a market depend upon profitability or loss in a specific market. Profits in
a market will attract the entry of new firms and losses lead to the exit of
non-performing firms from the market. In an ideal rivalry market, there is
liberty of entry or exit of firms. But in monopoly and oligopoly markets there
are blockades to entry of new firms.

Economies of Scale

Firms that achieve large economies of scale in production grow large in competition
to others in an industry. They tend to tidy out the other firms with the consequence
that a few firms are left to compete with each other. This leads to the emergence
of oligopoly. If only one firm attains economies of scale to such a large extent
that it is able to meet the market demand as a whole, there is monopoly.

Online Live Tutor Characteristic of Market, Determinants:

We have the best tutors in Economics in the industry. Our tutors can break down a
complex Characteristic of Market, Determinants problem into its sub parts and
explain to you in detail how each step is performed. This approach of breaking
down a problem has been appreciated by majority of our students for learning
Characteristic of Market, Determinants concepts. You will
get one-to-one personalized attention through our online tutoring which will
make learning fun and easy. Our tutors are highly qualified and hold advanced
degrees. Please do send us a request for Characteristic of Market, Determinants
tutoring and experience the quality yourself.

Online Market Structures Help:

If you are stuck with an Market Structures Homework problem and need help, we have
excellent tutors who can provide you with Homework Help. Our tutors who provide
Market Structures help are highly qualified. Our tutors have many years of
industry experience and have had years of experience providing Market Structures
Homework Help. Please do send us the Market Structures problems on which you
need help and we will forward then to our tutors for review.